MGMT 202 1st Edition Lecture 11 Outline of Last Lecture I. Laws that Regulate CompetitionII. Laws that Protect ConsumersIII. Laws that Promote Equity and SafetyIV. Laws that Protect the Natural EnvironmentV. Laws that Encourage Ethical ConductVI. Limitations of Legal RequirementsOutline of Current Lecture I. Economics vs. EngineeringII. Neoclassic Assumptions About HumansIII. Macro vs. Micro EconomicsIV. Neoclassic EconomistsCurrent LectureIs economics on par with engineering?Both offer technical advice – one action will have ________ consequencesBoth have precise methods (to understand relationships between actions and results)Both are value-free and objective Analogy fails in several ways:Economics has not achieved the scientific rigor that engineering hasLaws in economics are not as widely confirmed and accepted as scientific/mathematic lawsAssumptions about humans (neo-classic approach trying to explain human behavior):-humans are self-interested – minimum answer is “yes BUT”-humans are rational – not everyone really is; -humans learn from their mistakes and change their behavior if a choice is not beneficial to them – problem is, some mistakes people can’t recover from “first-generation problem” – assumption that you can always recover from mistakes – not always true Fundamental difference between macro and micro economicsThese lectures refer to micro economicsMacro – big picture; entire economyMicro – details of big picture; behaviors of individuals or firms or government agenciesNeoclassic economists:Adam Smith – Wealth of Nations – invisible hand (don’t need government enforcement), law of supply and demand (supply is a function of demand)David Ricardo – The Principles of Political Economy and Taxation – diminishing returns (increased input=decreased output), comparative advantage (country should focus on producing what they can produce most efficiently and trade with other companies)Thomas Malthus – Essay on the Principle of Population – theory on population (influenced Darwin’s theories on evolution etc; noticed plants and animals commonly overproduce – due to natural selection; survival – humans overproduce as well but don’t die off so natural resources are limited; associating overpopulation with poverty; compared to an epidemic; theory rejected at
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